HOW TO DEVELOP A REALISTIC LAW FIRM MARKETING BUDGET

HOW TO DEVELOP A REALISTIC LAW FIRM MARKETING BUDGET

In my previous post, I talked about the three stages of law firm growth. No matter where you are on the growth scale, you will need to budget for law firm marketing because growth will not happen without marketing and marketing will not happen without money.

So let’s talk about developing a realistic marketing budget according to stage:

Stage #1: Startup phase.

If you’re in the startup phase, you’ve probably been living paycheck to paycheck and hoping that the phone doesn’t stop ringing. You’re in that zero to $250,000 in gross annual revenues. You need to decide right now if all you want is a job, if you’re happy with a job. And if you are, then great, let’s make it a great job and let’s make sure that you’re satisfied with that.

But realize that at the end of the day, after all your expenses, the average solo practitioner only brings in $60,000 to $80,000 a year net after taxes, according to the American Bar Association. If you’re okay living on $60,000 to $80,000 a year, then that’s great.

But if you’ve got a family, you’ve got kids going to college, you’ve got a retirement that you got to prepare for, you don’t have a rich uncle or rich parents who are going to give you a boatload of money after they pass on, then you might need to budget for growth.

If you’re trying to upgrade to the next level and you’re at that startup phase, you need to spend a lot more of your time — at least 5-10 hours a week every week — on marketing, on networking, on speaking, on meeting with referral sources. You need to budget a minimum of $500 to $1,000 a month.

For some of you, $1,000 a month sounds like a lot. But if you’re not committed to going to the next level, and you’re not willing to put your money where your mouth is, you’re never going to make it to the next level. You’re still going to be struggling year after year, paycheck after paycheck.

You need to invest money in educating yourself on proven marketing techniques and strategies. I’m not talking about your local CLE at your local bar association. You need to come someplace like the Rainmaker Retreat where you can learn about these things in an intensive environment and be around other business owners to learn how they went from $250,000 to $500,000.

Don’t do any kind of mass advertising, value pack, or newspaper or radio. Don’t get caught up in that. You can’t afford to do it at this stage. But you do need to create a 90-day marketing action plan and evaluate it every quarter. Your whole goal is to get more leads, find two or three ways that you can get five or ten leads a month and then convert two or three of them into paying clients to help you go from that startup to $250,000.

Stage #2: Practice phase.

Once you reach the $250,000 to $500,000 range, moving from a job to a practice, you still need to invest 3-5 hours a week on marketing. You should budget 5% to 10% of your gross revenues for marketing. That’s $2,000 to $4,000 a month.

You may say, “Oh, my goodness, that’s a lot of money.” Not if you want to break a million. Think about it. You spend $2,000 a month, $24,000 a year, to make an extra $100,000, $200,000, $300,000, an extra half a million? That’s the way that businesses grow. If you want to reach seven figures in the next three to five years, you have to invest at least 10% of your gross revenues in marketing.

You may want to consider hiring a part-time person to help with your marketing or work with an external legal marketing company like ours that you can trust to outsource part of your marketing. There are some things you can outsource and other things you cannot outsource. Most law firms get stuck at this level, and very few of them break half a million dollars.

Now, if you want to break out of that half a million, you have to pay more to double your leads. You can’t think about incremental lead growth. If you’re getting 10 leads a month right now, you can’t think how do I get to 12 or 13 leads a month? You have to think about what do I need to do to go from 10 leads a month to 20 leads a month? You have to think bigger to break that seven-figure barrier.

Think about what you have to do for your marketing and business development to double the number of leads per month. Because not every single lead is going to turn into a paying client. A lot of those leads are going to be duds. A lot of them are not going to be ready to hire you now. A lot of them are going to make the decision to go somewhere else, which leads me to this point: You have to become better at sales. You need to become more comfortable asking for the money.

We spend a good amount of time on this at the Rainmaker Retreat training you how to overcome pricing objections, how to answer the question “How much is this going to cost?” in a way that’s professional and doesn’t mean you back down from your prices.

Stage #3: Business phase.

Now let’s say you’re in that half a million to a million-dollar mark and you want to move from a practice to a business. You need to budget a minimum of 10% of your gross revenues for marketing. That’s $4,000 to $8,000 per month.

At this point, you should have a part-time internal marketing assistant who works with your outsource marketing company. That’s one of the things that a lot of our clients have found. We do a lot of marketing activities for law firms, and what they’ve learned is that they can hire a lower qualified person and don’t have to pay them as much if they hire us to do a lot of the heavy lifting. They can have more of a marketing coordinator versus some sort of director of marketing that costs them a lot of money.

You need to have a written marketing plan for each practice area. If you have two or three practice areas, each of them should have a marketing plan, putting systems and people into place to run the systems. Remember: people run the systems and the systems run your law firm.

You should be outsourcing major parts of your marketing because no person, no matter how talented or qualified they are as a marketing person or marketing manager in your law firm, is going to have the expertise that you need to do everything. Typically, they’re going to have an expertise in either SEO or social media or direct response or mass advertising or referrals and relationship building. They’re typically going to have one or two of those specialties.

But if you want to build a multimillion-dollar law firm, you need to budget appropriately for marketing. When you’re doing that million dollars a year and you want to do $2 million, $4 million, $6 million, $8 million, $10 million a year, you have to upgrade your staff and your software. You have to systematize every part of your business. It’s all about building the team, improving your marketing, mastering sales, and upgrading your systems for your law firm.

 

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